STEM - Stem's Liquidity Angst And Cash Flow In 2024

2024-03-05 13:37:17 ET

Summary

• Stem, Inc. is facing a liquidity crunch despite growing demand for utility-scale energy storage.
• The company is set to generate $50 million in operating cash flow in 2024 with contracted annual recurring revenue set to reach $115 million exiting 2024 at minimum.
• With the commons trading for 0.62x the midpoint of its 2024 revenue guidance range, Stem, Inc. is set for a possible valuation boost when the Fed starts cutting interest rates.

Stem, Inc. ( STEM ) faces a crunch in liquidity even as demand for utility-scale energy storage booms, with cash and equivalents at $114 million at the end of its fiscal 2023 fourth quarter. The direction of liquidity over the last three years does not make for a pretty view, with a perpetual dip since the company went public. The situation is not existential, but Stem is increasingly being pushed towards a grey area as a Fed funds rate sitting at 22-year highs renders debt more expensive, darkens investor sentiment on green energy tickers, and disrupts the momentum of new green energy projects....

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